Nigeria leads as Africa nets $997.9bn in trade deals

Mathew Dadiya, Moscow

Nigeria has continued to retain its number one position as the fastest growing region in the world, ahead of other African countries as the continent’s total trade in 2018 has been estimated at $997.9 billion.

Nigeria’s trade growth is riding on the back of the much-sought intra-trade and integration, which rose steadily by 17 per cent to reach $159 billion.

The amount, which represents 3.4 per cent between 2017 and 2018 amid slowdown in global growth during the period, was contained in a new report by the African Export-Import Bank (Afreximbank), titled, “The African Trade Report 2019: African Trade in a Digital World”.

The report was launched on Friday in Moscow, Russia, on the sidelines of the ongoing 26th Annual Meetings of Afreximbank..

The report noted that estimates from the World Trade Organisation, showed that the volume of global merchandise trade grew by three per cent in 2018, down from 4.6 per cent in 2017.

It highlighted the resilience of Africa’s economies to global volatility at a time of rising uncertainty, escalating trade wars and tariffs between the United States, China and others.

The Chief Economist of Afreximbank and author of the report, Dr. Hippolyte Fofack, said: “Intra-African trade, which grew by 17 per cent in 2018, is more than three times the rate of growth of extra-African trade and was the major driver of Africa’s total merchandise trade in 2018.”

Also, the resilience reflects the diversification of Africa’s trading partners- South-South trade, growing fixed investment and public and private consumption, boosted by expanding urban populations and softening inflation, which reduced Africa’s exposure to the business cycles associated with individual countries and regions.

While the European Union remained Africa’s main continental trading partner in 2018, accounting for 29.8 per cent of total trade, African trade with the South grew significantly over the last decade to account for more than 35 per cent of the continent’s total trade in 2018.

President of Afreximbank, Prof. Benedict Oramah, said: “It is vital that Africa grasps the economic growth opportunities flowing from the African Continental Free Trade Agreement, growing domestic demand and population and our ever-closer investment and trading links with emerging partners in the South.

“We must exert concerted action to ensure that we develop, industrialize and diversify our industries and supporting infrastructure to foster regional integration and participate fully in regional and global value chains.”

China and India further consolidated their positions as Africa’s first and second single largest trading partners, accounting for over 21 per cent of total African trade in 2018.

The report also highlighted Africa’s potential to do more, as the contribution to global trade remained marginal at 2.6 per cent, up from 2.4 per cent in 2017, while intra-African trade rose to 16 per cent in 2018 from five per cent in 1980, although low compared to intra-regional trade in Europe and Asia.

The ongoing digitalisation is paving the way for a new African economy, with e-commerce platforms and internet penetration expediting transactions, reducing costs and leading to a new generation of transnational digital consumers.

However, African governments have been charged to further capitalise on the opportunities associated with digitalisation, by bolstering regulatory environments and supporting the development of digital ecosystems.

Oramah noted that digitalisation can unlock Africa’s potential in driving economic development and the integration of African countries into the world economy, as well as reduce the region’s dependency on raw commodities and natural resources by helping economies diversify into more value-added products that can enhance extra-and intra-African trade.